Fired CEO seeks to take control of board

MattAndrejczak

George Perlegos, former chairman and chief executive officer at Atmel, seeks to oust some of the company's directors that fired him last summer over alleged misuse of corporate travel expenses. He also wants to toss the CEO that replaced him.

Perlegos said he plans to call a special shareholder meeting May 18 in which he will nominate a slate of five directors to the San Jose, Calif.-based chipmaker's six-person board.

"As one of Atmel's largest shareholders, I am concerned that the current board and management have undertaken a series of entrenching, self-enriching and value-eroding actions," Perlegos said in a statement.

His proxy fight was approved by the Delaware Chancery Court on Thursday.

While he is still in the process of naming his slate of directors, Perlegos said he will not nominate himself for a board seat. He aims to remove to CEO Steve Laub as well as directors Pierre Fougere, Dr. Chaiho Kim, David Sugishita and T. Peter Thomas.

Perlegos said he plans to reposition Atmel
ATML
to focus on microcontrollers. Further details will be provided when he files his preliminary proxy statement with securities regulators as early as March 29.

Through a spokeswoman, he could not be reached for comment. Atmel officials weren't available for comment.

Atmel makes microcontroller and radio-frequency chips used in cell phones, disk drives, car alarms, camcorders and other applications. Over the past year, Atmel has drawn the interest of private-equity firms. In May 2006, Perlegos rejected a preliminary takeover offer valued at $2.7 billion, or $5.50 a share.

Since the board fired Perlegos and his older brother Gust last August, the company's new management has been restructuring its operations and reviewing its 40-plus product lines, moves that some investors had long been waiting for.

Atmel is the process of selling plants in the United Kingdom and Germany and slashing 1,300 jobs from its 8,000-person workforce. The moves are projected to save up to $80 million in 2007, and up to $95 million annually thereafter. Over the past year, the company has sold two plants in France. It owns six plants worldwide.

Due to a pending review of its stock option accounting, the company hasn't reported whether it's made or lost money the past few quarters. In 2006, Atmel booked sales of $1.67 billion, up 7% from the prior year.

Analysts say Atmel's microcontroller division is its most promising venture, selling to a range of markets. Its microcontrollers, which made up 25% of the company's total revenue, are used in consumer, automotive, and industrial products.

"Irrespective of who runs the company, we believe there is significant value to be unlocked at Atmel," said Suji Desiliva, analyst at Cathay Financial, which rates the stock outperform.

If he wins the proxy fight, Perlegos said he would be willingly to serve as interim CEO while the company conducts a search for a permanent CEO to "revitalize the management team."

He unsuccessfully tried to win back the CEO office, suing Atmel after he and his brother were fired for misusing corporate travel funds. In their lawsuit, the Perlegos' claimed they were victims of an airfare booking scheme carried out by a former employee.

On Feb. 8, the Delaware Chancery Court rejected their claims, ruling that the board has properly terminated the brothers. Atmel alleged the brothers had used corporate funds to pay for 400 airline tickets for their family, friends and themselves, according to court documents.

At the same time, the court ruled in its 76-page opinion that the company had unlawfully cancelled Perlegos' request for a special shareholder meeting.

Perlegos, a soft-spoken Greek immigrant, founded Atmel in 1984, bankrolling the company with $23,000 of his own money. He is credited with engineering breakthroughs for a memory chip-technology called EPROM, or erase programmable read-only memory, while working at Intel in the mid-to-late 1970s. The technology is widely used in personal computers.

He is one of the company's largest shareholders, owning 5.3% of Atmel's outstanding common stock. Another large holder is Goldman Sachs Asset Management, L.P., which owned 10.1%, based on a Jan. 10 regulatory filing.

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